The Great Resignation has impacted financial services leaders and middle managers, putting organizations at risk of disruption. Oftentimes, succession planning is reactive event-driven and focuses heavily on identifying a replacement rather than a leader with traits and competencies to fulfill future business needs.
Financial institutions should instead align their succession planning strategy with the firm’s future business needs and goals, and identify the leadership traits that will best accelerate those goals. Not only will a more systematic approach build an organization’s resilience, but it will also increase productivity and financial return.
Here are five steps firms should take to improve succession planning:
1. Define your firm’s future business needs and digital journey.
Your succession strategy should be created under the context of the firm’s business and digital journey. Here are a few critical questions you should be asking fellow senior leaders to help you link succession needs directly to strategic business planning.
- What are the functional activities and performance levels that must be maintained today, how will they be different tomorrow as the business changes or grows?
- What are the strengths and weaknesses of our operating model? What are the opportunities and threats that can significantly impact the type of resources and the level of leadership bench strength required to sustain performance as operating models evolve over time?
- What leadership, business, and technical skills and competencies are required in our talent portfolios to execute our strategy and fulfill strategic objectives? How do they map to the critical roles we need now and in the future for growing and sustaining our digital business capabilities?
- What risks are we exposed to especially in attaining and retaining leaders/high-potential talent for the business?
2. Define and build consensus on the key traits of your future leaders important to your firm.
This is fundamental to identifying leaders for the future. New leadership behaviors will be essential in sustaining and supporting an organization’s future hybrid work environment as well as future digital disruptions. Gartner’s framework for disruptive leader traits and digital workforce competency framework is a great starting point.
3. Tap into the organization’s broader pool of talent to identify potential successors.
Most firms today still attempt to build a strong leadership bench through a pipeline approach. However, this approach is not sustainable as the pipeline frequently breaks.
- 55% of high-potential employees will leave the organization and exit the pipeline.
- Only 25% of successor candidates see succession as a significant career progression.
By identifying successors across the enterprise, firms can reduce the risk of succession failures and overcome proximity bias by forcing consideration of more diverse candidates.
4. Use experiential learning to develop future leaders
Incorporate truly blended learning approaches to differentiate your succession planning from traditional replacement planning. Placing experiential learning at the heart of your learning strategy for future leaders will help you build the traits and desired leadership traits in potential successors. To achieve this, design an Executive Experience Framework to guide the identification of learning opportunities for your future leaders.
5. Continuously adapt the program.
Last but not least, your succession planning management strategy needs constant monitoring and evaluation. Review the progress of your succession planning management by focusing on four important A’s:
- Alignment: Strive to build and align a reliable supply of talent that meets the needs of an ever-changing business environment.
- Accessibility: Build a transparent process that embraces diversity, builds a robust pool of talent with leadership capabilities across all organizational levels.
- Assessment: Integrate competency models into the core leadership and talent practices.
- Advancement: Place leadership development as a strategic priority. Help leaders personalize career paths, diversify learning experiences, and exposure to opportunities.
Focusing on the four A’s creates a succession planning strategy with a strong discipline and alignment with the firm’s future business needs, thereby creating a process that is effective and reliable.
The result of a robust succession planning strategy is a more prepared leadership bench that is well-equipped to accelerate a firm’s growth and evolution in this ever-changing world.
To learn more from other best-in-class organizations build effective succession management plans, see
- Rethinking Leadership Behaviors for the new Normal
- Build Resilience in Your Workforce through Succession Planning and Management,
- How to Improve Succession Planning
- New Year, New Era: Finding Your Purpose and Becoming a Better Leader